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EXHIBIT C(2)
Shareholder Agreement
This Shareholder Agreement is made as of November 7, 1991 (the
"Agreement") by and among Guaranty National Corporation, a Colorado corporation
("Guaranty"), Orion Capital Corporation, a Delaware corporation ("Orion"), and
certain of Orion's wholly-owned subsidiaries listed on Schedule I hereto that
currently hold all the outstanding Common Stock of Guaranty (collectively
referred to hereinafter as the "Selling Shareholders").
WHEREAS, On September 13, 1991 Guaranty filed Registration Statement
No. 33-42781 on Form S-1 ("1991 Registration Statement") with the Securities
and Exchange Commission with respect to the public sale (the "Offering") of
approximately 7,187,500 shares (including up to 937,500 shares to be sold to
cover underwriters' over-allotment options) of Common Stock, par value $1.00 per
share ("Common Stock"), on behalf of the Selling Shareholders; and
WHEREAS, upon the date of the initial closing ("Initial Closing") of
the Offering in accordance with its terms (such date referred to hereinafter as
the "Offering Closing Date"), Guaranty will become a public corporation with the
Selling Shareholders retaining no more than 49.6% shares of the outstanding
Guaranty Common Stock (excluding the underwriters' over-allotment options) (such
shares of Guaranty Common Stock owned by Selling Shareholders or transferred to
any other wholly-owned subsidiary of Orion or to any other purchaser from a
Selling Shareholder not pursuant to a registered public offering after the
Offering Closing Date are referred to hereinafter as the "Sellers Stock"); and
WHEREAS, prior to the Offering Closing Date, pursuant to a Note
Issuance Agreement of even date herewith, Guaranty will issue in the aggregate
approximately $20,896,000 principal amount of its 9 1/2% subordinated notes due
1998 (hereinafter referred to as the "Guaranty Notes"), including $19,829,000 of
such Guaranty Notes as a special dividend to the Selling Shareholders and
$1,067,000 of such Guaranty Notes to repurchase certain fixed assets from
another wholly-owned subsidiary of Orion;
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and agreements, and subject to the terms and considerations set forth
herein, the parties hereto agree as follows:
1. Board of Directors of Guaranty.
1.1 Membership on the Board of Directors Selection of
Chairman and Committees
(a) Immediately prior to the effectiveness of the Initial
Closing of the Offering on the Offering Closing Date, Messrs. Vincent T. Papa
and Raymond J. Schuyler, each a senior officer of Orion, shall tender his
resignation from the Guaranty Board of Directors and Mr. Roger B. Ware will
tender his resignation as a Senior Vice President of Orion, all effective as of
the completion of the Initial Closing on the Offering Closing Date. Upon
completion of the Initial Closing on the Offering Closing Date, the remaining
Guaranty Board members shall take action to increase the number of the members
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of the Guaranty Board of Directors from six to seven and shall elect Messrs.
Carroll D. Speckman, Richard R. Thomas and William J. Shepherd (as described in
the 1991 Registration Statement), to fill the vacancies on the Board created by
the resignations and the increase in the size of its membership. Messrs.
Speckman, Thomas and Shepherd shall serve as members of Guaranty's Board until
(i) the next annual or special meeting of shareholders of Guaranty following the
Offering Closing Date at which shareholders are entitled to vote on the election
of the members to the Guaranty Board and (ii) until their successors are elected
and shall qualify.
(b) Upon completion of the Initial Closing and after the
Offering Closing Date, and for as long as Orion and/or any of Orion's
wholly-owned subsidiaries shall beneficially own, in the aggregate, at least 20
percent of the outstanding Common Stock (including securities convertible or
exchangeable into Common Stock or other securities having voting rights on a par
with the Common Stock referred to hereinafter as Convertible Securities),
Orion, Guaranty and the Selling Shareholders agree that the Board of Directors
of Guaranty shall consist of seven members. Nominees for such seven
directorships shall be designated as follows: (i) three nominees shall be
designated by Orion and its wholly-owned subsidiaries owning Sellers Stock
("Orion Nominees"), (ii) two nominees shall be officers of Guaranty, and (iii)
two nominees shall be nominees mutually agreeable to Orion and Guaranty who are
persons who are not (x) officers, directors or employees of Orion or its
wholly-owned subsidiaries, or (y) officers or employees of Guaranty or its
wholly-owned subsidiaries ("Independent Nominees"). Notwithstanding the
foregoing, if the aggregate beneficial ownership of the Common Stock (including
any Convertible Securities) held by Orion and/or any of its wholly-owned
subsidiaries is less than 30 percent of the outstanding Common Stock (including
any Convertible Securities) then, with respect to the next annual or special
meeting of Guaranty shareholders to be held for the election of directors,
following the date on which such ownership fell below 30 percent but remains in
excess of 20 percent, the number of nominees to the Guaranty Board of Directors
that Orion and the Selling Shareholders have a right to designate pursuant to
this Section 1.1 shall be reduced to two.
(c) After the Offering Closing Data and for so long as Orion
and/or any of its wholly-owned subsidiaries beneficially own, in the aggregate,
at least 30 percent of the outstanding Common Stock (including any Convertible
Securities) the Chairman of the Board of Guaranty shall be selected by the Orion
Nominees on the Guaranty Board. As of the Offering Closing Date, the Chairman of
Guaranty shall be Alan R. Gruber.
(d) After the Offering Closing Date and for so long as Orion
and/or any of its wholly-owned subsidiaries beneficially own, in the aggregate,
at least 20 percent of the outstanding Common Stock (including any Convertible
Securities) (i) the Executive Committee of Guaranty shall be composed of the
Chairman of the board of Guaranty, the President of Guaranty and one of the
Independent Nominees (ii) the Compensation Committee of Guaranty shall include
the Orion Nominees and (iii) the Audit Committee of Guaranty shall include the
two Independent Nominees.
(e) For so long as Orion and/or any of Orion's wholly-owned
subsidiaries shall beneficially own, in the aggregate, at least 20 percent of
the outstanding Common Stock (including any Convertible Securities) , Guaranty
shall use its best efforts to (i) have the Orion Nominees elected to the Board
of Directors at each annual or special meeting of shareholders of Guaranty,
commencing with the annual meeting of shareholders of Guaranty next following
the Offering Closing Date, and (ii) cause to be voted all the outstanding shares
of Common Stock entitled to be voted at such meetings in favor of the election
of such Orion Nominees. In the event that any Orion Nominee on the Board of
Directors shall cease to serve as a director for any reason during the period
that this Section 1.1(e) is in effect,
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Guaranty shall use its best efforts to cause the vacancy resulting thereby to be
filled by another Orion Nominee.
(f) Notwithstanding any of the foregoing, nothing shall
prevent Guaranty's directors or officers, acting individually or collectively,
from taking any action in contravention of the terms of this Section 1.1 if
Guaranty has received a written opinion from outside legal counsel reasonably
satisfactory to Orion stating that unless such action is taken such director or
officer would be materially violating such director's or officer's fiduciary
duties to Guaranty and its shareholders.
1.2 Information to Directors. Guaranty shall furnish to the Orion
Nominees serving on Guaranty's Board of Directors all information that is
provided to the other directors of Guaranty in their capacities as such.
2. Registration Rights.
2.1 Required Registration - Sellers Stock. (a) For a period of
six years after the Offering Closing Date, if and whenever Guaranty receives a
written request from the registered owners of more than 20% of Sellers Stock,
Guaranty shall prepare and file with the Securities and Exchange Commission (the
"Commission") a registration statement under the Securities Act of 1933, as
amended ("Securities Act"), on the appropriate form or forms, covering the
offering of the number of shares of Sellers Stock which are the subject of such
request. Guaranty shall use its best efforts to cause such registration
statement to become effective. Notwithstanding the foregoing, however, Guaranty
shall not be required to effect more than one registration under this Section
2.1 during any twelve-month period. Guaranty shall be obligated, however, in any
event, to prepare, file and cause to become effective up to three registration
statements pursuant to this Section 2. Guaranty shall not be required to effect
a registration under this Section 2.1 which involves the sale of Sellers Stock
(a) with an aggregate sale price (before deductions of underwriting discounts
and expenses of sale) of less than $10,000,000 or (b) that, in the written
opinion, which is reasonably acceptable to the beneficial owners of the Sellers
Stock, of securities counsel to Guaranty, that the Sellers Stock which is
requested to be registered may be, as of the date of such opinion, publicly
offered, sold and distributed without registration under the Securities Act
(without any restrictions as to volume or the potential purchaser's financial
sophistication or net worth), provided further that Orion and the beneficial
owners of such Sellers Stock are permitted to rely on such opinion. Without the
written consent of 50 percent of the beneficial owners of the Sellers Stock that
have requested such demand registration, neither Guaranty nor any other holder
of securities of Guaranty may include securities in such demand registration;
provided, however, that if a registration pursuant to this Section 2.1 is to
involve a fully underwritten public offering of Sellers Stock, Guaranty may
include securities in such registration if, but only if, the managing
underwriter of such public offering concludes, in the exercise of its good faith
judgment, that such inclusion will not adversely affect the successful marketing
or reduce the expected selling price of the Sellers Stock in such public
offering. The managing underwriter or underwriters of any underwritten public
offering requested pursuant to this Section 2.1 shall be a firm of national
reputation selected by the beneficial owners of the Sellers Stock with the
consent of Guaranty, which consent shall not be unreasonably withheld.
(b) Orion or any of the Selling Shareholders may assign any or
all of its rights to cause Guaranty to effect a registration pursuant to this
Section 2.1 and Section 2.2 below to any wholly-owned subsidiary of Orion or, on
prior notice to Guaranty, to any other transferee from a Selling Shareholder,
provided that such purchaser agrees in writing to be bound by the terms hereof
as though it were Orion or a Selling Shareholder.
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(c) Guaranty may grant subsequent investors rights of
registration upon request and rights of incidental registration (such as those
provided in Section 2 hereof); provided, however, that in the case of such
rights granted to subsequent investors (i) such rights are not inconsistent with
the provisions of this Agreement and (ii) the instrument granting such rights
specifically confirms the prior rights of the holders of the Sellers Stock or
Guaranty Notes under this Agreement.
2.2 Required Registration - Guaranty Notes. For a period of
six years after the Offering Closing Date, if and whenever Guaranty receives a
written request from the holders of $10,000,000 or more, in aggregate principal
amount, of the Guaranty Notes ("Guaranty Note Holders"), Guaranty shall prepare
and file with the Commission a registration statement under the Securities Act
on the appropriate form or forms, covering the offering of the principal amount
of the Guaranty Notes which is the subject of such request. Guaranty shall use
its best efforts to cause such registration statement to become effective;
provided, however, that Guaranty shall not be required to effect such
registration if in the written opinion, which is reasonably acceptable to the
Guaranty Note Holders, of securities counsel to Guaranty, the Guaranty Notes
requested to be registered may be, as of the date of such opinion, publicly
offered, sold and distributed without registration under the applicable federal
securities laws, provided further, that the beneficial owners of such Guaranty
Notes are permitted to rely on such opinion. Guaranty shall be obligated to
prepare, file and cause to become effective only one Registration Statement
pursuant to this Section 2.2. Without the written consent of the holders of 50%
in the aggregate principal amount of the Guaranty Notes to be so offered to the
public, neither Guaranty nor any holder of securities of Guaranty may include
securities in such registration; provided, however, that if a registration
pursuant to this Section 2.2 is to involve a fully underwritten public offering
of such Guaranty Notes, Guaranty may include securities in such registration if,
but only if, the managing underwriter of such public offering concludes, in the
exercise of its good faith judgment, that such inclusion will not adversely
affect the successful marketing or reduce the expected selling price of the
Guaranty Notes in such public offering. The managing underwriter or underwriters
of any underwritten public offering requested pursuant to this Section 2.2 shall
be a firm of national reputation selected by the holders of 50% in the aggregate
principal amount of the Guaranty Notes to be so offered to the public, with the
consent of Guaranty, which consent shall not be unreasonably withheld.
2.3 Incidental Registration. For a period of six years after
the Offering Closing Date, each time Guaranty shall determine or be required to
file a registration statement under the Securities Act (other than on Form S-8
or a successor form thereto) in connection with the proposed offer and sale for
cash of any of its securities by it or any of its security holders (other than
the beneficial owners of the Sellers Stock), Guaranty will promptly give written
notice of such determination or requirement to the beneficial owners of the
Sellers Stock. Upon the written registration request of the beneficial owners of
Sellers Stock with a potential aggregate sale price of at least $1,000,000 given
within 30 days after the date of any such notice by Guaranty, Guaranty will
cause all shares of Sellers Stock for which the beneficial owners of Sellers
Stock have requested registration to be included in such registration statement.
If any registration pursuant to this Section 2.3 is to be underwritten in whole
or in part, Guaranty shall use its best efforts to cause the Sellers Stock
requested for inclusion pursuant to this Section 2.3 to be included in the
underwriting on the same terms and conditions as the securities otherwise being
sold through the underwriters. If, in the good faith judgment of the managing
underwriter of such public offering (which underwriters shall be a firm of
national reputation), the inclusion of all of the Sellers Stock requested to be
registered pursuant to this Section 2.3 and of all of the Common Stock or other
securities of Guaranty requested to be registered by other securityholders of
Guaranty with respect to such registration statement would adversely affect the
successful marketing of the securities to be offered by Guaranty or its
securityholders (other than the beneficial owners of the
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Sellers Stock), as the case may be, then the maximum number of shares of Common
Stock which the managing underwriter will permit the beneficial owners of the
Sellers Stock and such other securityholders to include in the offering (in
addition to the shares to be offered by Guaranty) shall be pro rated among the
beneficial owners of the Sellers Stock and such other securityholders.
2.4 Registration Procedures. If and whenever Guaranty is
required by the provisions of Section 2.1, 2.2 or 2.3 to effect the registration
of shares of Sellers Stock or Guaranty Notes, Guaranty will:
(a) Prepare and file with the Commission a registration
statement on the appropriate form or forms with respect to such
securities and use its best efforts to cause such registration
statement to become and remain effective for at least 90 days
thereafter, and prepare and file with the Commission such amendments or
supplements as may be necessary to keep such registration statement
effective for at least 90 days after the effective date of the
registration statement.
(b) Enter into a written underwriting agreement or agreements
in form and substance reasonably satisfactory to the managing
underwriter or underwriters of the public offering of such securities,
if the offering is to be underwritten in whole or in part.
(c) Furnish to the beneficial owners of the Sellers Stock or
the Guaranty Note Holders, as the case may be, such reasonable number
of copies of the registration statement, preliminary prospectus, final
prospectus and such other documents as may reasonably be requested in
order to facilitate the public offering of such securities.
(d) Use its best efforts to register or qualify the securities
covered by such registration statement under such state securities or
blue sky laws of such jurisdictions as the beneficial owners of the
Sellers Stock or the Guaranty Note Holders, as the case may be, may
reasonably request, except that Guaranty shall not for any purpose be
required to execute a general consent to service of process or to
qualify to do business as a foreign corporation in any jurisdiction
where it is not so qualified.
(e) Notify the beneficial owners of the Sellers Stock or the
Guaranty Note Holders, as the case may be, promptly after it shall
receive notice thereof, of the time when such registration statement
has become effective or an amendment or a supplement to any
registration or prospectus forming a part of such registration
statement has been filed.
(f) Notify the beneficial owners of the Sellers Stock or the
Guaranty Note Holders, as the case may be, promptly of any request by
the Commission for the amending or supplementing of such registration
statement or prospectus or for additional information.
(g) Prepare and file with the Commission promptly, upon the
request of the beneficial owners of the Sellers Stock or the Guaranty
Note Holders, as the case may be, any amendments or supplements to such
registration statement or prospectus which, in the opinion of counsel
for the beneficial owners of the Sellers Stock or the Guaranty Note
Holders, as the case may be, are required under the applicable federal
securities laws or the rules and regulations thereunder in connection
with the distribution of the Sellers Stock or Guaranty Notes.
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(h) Prepare and promptly file with the Commission, and
promptly notify the beneficial owners of the Sellers Stock or the
Guaranty Note Holders, as the case may be, of the filing of, such
amendment or supplement to such registration statement or prospectus as
may be necessary to correct any statements in, or omissions from, such
registration statement, if, at the time when a prospectus relating to
such securities is required to be delivered under any applicable
federal securities laws, any event has occurred as the result of which
any such prospectus or any other prospectus as then in effect would
include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading
in the light of the circumstances in which they were made.
(i) In the event the beneficial owners of the Sellers Stock or
Guaranty Note Holders, as the case may be, or any underwriter for the
beneficial owners of the Sellers Stock, or the Guaranty Note Holders,
as the case may be, is required to deliver a prospectus at a time when
the prospectus then in effect may no longer be used under applicable
federal securities laws, prepare promptly upon request of the
beneficial owners of the Sellers Stock or Guaranty Note Holders, as the
case may be, such amendments or supplements to such registration
statement and such prospectus as may be necessary to permit compliance
with the requirements of applicable federal securities laws.
(j) Advise the beneficial owners of the Sellers Stock or the
Guaranty Note Holders, as the case may be, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of any stop
order by the Commission suspending the effectiveness of such
registration statement or the initiation or threatening of any
proceeding for that purpose and promptly use its best efforts to
prevent the issuance of any stop order or to obtain its withdrawal if
such stop order should be issued.
(k) Not file any amendment or supplement to such registration
statement or prospectus to which any of the beneficial owners of the
Sellers Stock or the Guaranty Note Holders, as the case may be,
reasonably objects on the ground that such amendment or supplement does
not comply in all material respects with the requirements of any
applicable federal securities law or the rules and regulations
thereunder, after having been furnished with a copy thereof at least
five business days prior to the filing thereof.
(l) At the request of the beneficial owners of the Sellers
Stock or the Guaranty Note Holders, as the case may be, furnish on the
effective date of the registration statement and, if such registration
involves an underwritten public offering, at the closing provided for
in the underwriting agreement, (i) an opinion of the counsel
representing Guaranty (such counsel being reasonably satisfactory to
the beneficial owners of the Sellers Stock or Guaranty Note Holders, as
the case may be), for the purposes of such registration, addressed to
the underwriters, if any, and to the beneficial owners of the Sellers
Stock or the Guaranty Note Holders, as the case may be, covering such
matters with respect to the registration statement, the prospectus and
each amendment or supplement thereto, proceedings under state and
federal securities laws, other matters relating to Guaranty, the
securities being registered and the offer and sale of such securities
as are customarily the subject of opinions of issuer's counsel provided
to underwriters in underwritten public offerings, and (ii) a letter
dated each such date, from the independent certified public accountants
of Guaranty addressed to the underwriters, if any, and to the
beneficial owners of the Sellers Stock or the Guaranty Note Holders, as
the case may be, stating that they are independent certified public
accountants within the meaning of the applicable federal
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securities laws and that, in the opinion of such accountants, the
financial statements and other financial data of Guaranty included in
the registration statement or the prospectus or any amendment or
supplement thereto comply in all material respects with the applicable
accounting requirements of the applicable federal securities laws, and
additionally covering such other financial matters, including
information as to the period ending not more than five business days
prior to the date of such letter and with respect to the registration
statement and the prospectus, as the underwriters or the beneficial
owners of the Sellers Stock or the Guaranty Note Holders, as the case
may be, may reasonably request.
(m) Refrain from making any sale or distribution of its voting
securities, except pursuant to any employee stock plan and any
pre-existing agreement for the sale of such securities, during the
period commencing seven days prior to, and expiring 120 days after, the
registration statement has become effective.
2.5 Expenses.
(a) With respect to the first two registrations to be effected
pursuant to Section 2.1 and the registration to be effected pursuant to
Section 2.2 hereof, all out-of pocket fees, costs and expenses of and
incidental to such registration and public offering in connection
therewith shall be borne by Guaranty.
(b) With respect to any third registration to be effected
pursuant to Section 2.1 hereof or with respect to the inclusion of
shares of Sellers Stock in a registration statement pursuant to Section
2.3 hereof, all the fees, costs and expenses of such registration under
Section 2.1 and the additional fees costs and expenses as may be
incurred as a result of the exercise of rights under Section 2.3 hereof
shall be born by the beneficial owners of Sellers Stock being so
registered.
(c) The fees, costs and expenses of registration to be borne
as provided in Section 2.5 (a) above shall include, without limitation,
all registration, filing and National Association of Security Dealers'
fees, printing expenses, fees and disbursements of counsel and
accountants for Guaranty, fees and disbursements of underwriters of
such securities, all legal fees and disbursements and other expenses of
complying with state securities or blue sky laws of any jurisdictions
in which the securities to be offered are to be registered or
qualified, and premiums and other costs of policies of insurance
against liability arising out of such public offering, but not the fees
and disbursements of counsel and accountants for the beneficial owners
of the Sellers Stock or Guaranty Note Holders, as the case may be.
2.6 Indemnification.
(a) Guaranty will indemnify and hold harmless each of the
beneficial owners of the Sellers Stock or Guaranty Note Holders and any
underwriter (as defined in the Securities Act) for the beneficial
owners of the Sellers Stock or Guaranty Note Holders, and each person
who is an officer or director of or who controls the beneficial owners
of the Sellers Stock, the holders of Guaranty Notes or such underwriter
within the meaning of the Securities Act, from and against, and will
reimburse the beneficial owners of the Sellers Stock, Guaranty Note
Holders and each such underwriter and person with respect to, any and
all claims, actions, demands, losses, damages, liabilities, attorneys'
fees, costs and other expenses to which the beneficial owners of the
Sellers Stock, Guaranty Note Holders or any such underwriter or
controlling
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person may become subject under the Securities Act or otherwise,
insofar as such claims, actions, demands, losses, damages, liabilities,
costs, attorneys' fees or other expenses arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in such registration statement, any prospectus contained
therein or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein or
necessary to make the statements therein, in light of the circumstances
in which they were made, not misleading; provided, however, that
Guaranty will not be liable in any such case to the extent that any
such claim, action, demand, loss, damage, liability, cost, attorneys'
fees or other expense is caused by an untrue statement or alleged
untrue statement or omission or alleged omission so made in strict
conformity with information furnished by the beneficial owners of the
Sellers Stock or any Guaranty Note Holders, such underwriter or such
controlling person in writing specifically for use in the preparation
thereof.
(b) Each of the beneficial owners of the Sellers Stock or
Guaranty Note Holder that are to be included in any registrations under
this Agreement will indemnify and hold harmless Guaranty, and any
underwriter (as defined in the Securities Act) for Guaranty, and each
person who is an officer or director of or who controls Guaranty or
such underwriter within the meaning of the Securities Act, from and
against, and will reimburse Guaranty with respect to, any and all
claims, actions, demands, losses, damages, liabilities, costs or
expenses to which Guaranty may become subject under the Securities Act
or otherwise, insofar as such claims, actions, demands, losses,
damages, liabilities, costs, attorneys' fees or other expenses are
caused by any untrue or alleged untrue statement of any material fact
contained in such registration statement, any prospectus contained
therein or any amendment or supplement thereto, or are caused by the
omission or the allege omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein. in light of circumstances in which they are made, not
misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or
alleged omission vas so made in reliance upon and in strict conformity
with written information furnished by a beneficial owner of the Sellers
Stock or Guaranty Note Holders specifically for use in the preparation
thereof.
(c) Promptly after receipt by an indemnified party pursuant to
the provisions of paragraphs (a) or (b) of this Section 2.6 of notice
of commencement of any action involving he subject matter of the
foregoing indemnity provisions, such indemnified party will, if a claim
thereof is to be made against the indemnifying party pursuant to the
provisions of paragraphs (a) and (b), notify the indemnifying party of
the commencement hereof, but the omission so to notify the indemnifying
party will not relieve it from any liability which it may have to an
indemnified party otherwise than under this Section 2.6. In case such
action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party
shall have the right to participate in and, to the extent that it may
wish, assume the defense thereof, with counsel reasonably satisfactory
to such indemnified party, and after notice from the indemnifying party
to such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such indemnified
party pursuant to the provisions of paragraphs (a) and (b) for any
legal or other expense subsequently incurred by such indemnified party
in connection with the defense thereof, other than reasonable costs of
investigation. No indemnifying party shall be liable to an indemnified
party for any settlement of any action or claim without the consent of
the indemnifying party.
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2.7 Reporting Requirements Under the Securities Exchange Act
of 1934. Guaranty shall take such reasonable measures, and shall file such other
information, documents and reports as shall be required by the Commission as a
condition to the availability of Rule 144 under the Securities Act (or any
similar exemptive provision hereafter in effect) and the use of Form S-3.
Guaranty also covenants to use its best efforts, to the extent that it is
reasonably within its power to do so, to qualify for the use of Form S-3.
2.8 Standoff. Orion and the Selling Shareholders agree in
connection with any underwritten public offering of Guaranty's securities that,
upon the request of the managing underwriter of such public offering, it shall
commit itself not to offer or sell publicly any Sellers Stock, or Guaranty
Notes, other than such stock or Guaranty Notes included in a public offering,
for a period not to exceed 120 days from the closing of such public offering.
3. Miscellaneous.
3.1 Governing Law. This Agreement shall be governed in all
respects by the Laws of the State of Colorado as applied to contracts entered
into solely between residents of, and to be performed entirely within, such
state.
3.2 Successors and Assigns. Except as otherwise expressly
provided herein, the rights and duties of this Agreement may not be assigned.
The Selling Shareholders, however, without prior notice to Guaranty, may assign
their rights and duties hereunder to other wholly-owned subsidiaries of Orion.
3.3 Entire Agreement: Amendment. This Agreement constitutes
the full and entire understanding and agreement among the parties with regard to
the subjects hereof and thereof and supersedes all prior agreements and
understandings between the parties relating the subject matter hereof. Any term
of this Agreement may be amended, discharged or terminated and the observance of
any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only by a written
instrument signed by the party against whom enforcement of any such amendment,
discharge, termination or waiver is sought.
3.4 Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be delivered either by (i)
personal delivery, (ii) postage prepaid, return receipt requested certified mail
(air-mail, if available), or the equivalent of certified mail under the laws of
the country where mailed; (iii) facsimile transmission, or (iv) telex with
confirmed answerback received, addressed as follows:
Guaranty: Guaranty National Corporation
100 Inverness Terrace East
Englewood, CO 80112
Attention: Mr. Roger B. Ware
President
Facsimile: (303) 790-7136
Copy to: Holmes & Starr
1600 Broadway, 26th Floor
Denver, CO 80202-4926
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Attention: Hardin Holmes, Esq.
Facsimile: (303) 839-4380
Orion and Orion Capital Corporation
Selling 30 Rockefeller Plaza, Rm. 2820
Shareholders: New York, NY 10112
Attention: Alan R. Gruber
Chairman
Facsimile: (212) 581-7261
Copy to: Donovan Leisure Newton & Irvine
30 Rockefeller Plaza
New York, NY 10112
Attention: Robert Hart, Esq.
Facsimile: (212)
Any party may change its address for such communications by giving
notice thereof to the other party in conformity with this section.
3.5 Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any party hereto upon any breach or default
of any other party under this Agreement shall impair any such right, power or
remedy of such party nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver or any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing.
3.6 Remedies: Specific Performance. All remedies either under
this Agreement, or by law or otherwise afforded to the parties hereunder, shall
be cumulative and not alternative. In addition to any remedies available at law
for any breach or failure to perform any obligation under this Agreement, the
parties intend and agree that the provisions of this Agreement shall be
specifically enforceable in any court having appropriate jurisdiction therefor
and that the parties hereto shall be entitled to injunctive and other equitable
relief for any such breach or failure to perform.
3.7 Severability of Provisions. If any term, provision,
covenant or restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be effected, impaired or invalidated to the
extent permitted by applicable law.
3.8 Titles and Subtitles. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
3.9 Counterparts.. This Agreement may be executed in
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
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IN WITNESS WHEREOF, each of the parties hereto duly authorized
thereunto, has executed this Agreement as of the day and year set forth in the
heading hereof.
GUARANTY NATIONAL CORPORATION
By:
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ORION CAPITAL CORPORATION
By:
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Alan R. Gruber
Chairman and Chief Executive Officer
THE CONNECTICUT INDEMNITY COMPANY
CONNECTICUT SPECIALTY INSURANCE COMPANY
DESIGN PROFESSIONALS INSURANCE COMPANY
EMPLOYEE BENEFITS INSURANCE COMPANY
THE FIRE & CASUALTY INSURANCE COMPANY
OF CONNECTICUT
SECURITY INSURANCE COMPANY OF HARTFORD
SECURITY REINSURANCE COMPANY
By:
--------------------------------------
Raymond J. Schuyler
Senior Vice President-Investments
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